FOSL · Fossil Group, Inc.

Fossil Group delivered a strong Q1 2026 turnaround, posting operating income of $12.0 million and 5.4% margin versus a prior-year loss, driven by sharp operating expense cuts to $122.7 million (down 18.1%) including lower restructuring from $15.8 million to $2.0 million and SG&A leverage to 53.6% of sales. Net sales dipped 3.6% to $224.8 million, with 690 bps drag from a 13-week quarter versus 14 weeks prior year, plus store rationalization and smartwatch declines; constant currency sales fell 6.5%, led by 14% drop in Europe. Gross margin contracted 140 bps to 59.9% from tariffs and royalty timing, mitigated by $4.0 million tariff refunds. CEO Franco Fogliato highlighted product innovation, brand storytelling, and healthy watch trends fueling outperformance across channels and brands like ARMANI EXCHANGE, MICHAEL KORS, and DIESEL, though FOSSIL brand fell 17%. Traditional watches held flat constant currency, but leathers plunged 41%. Balance sheet strengthened with inventories down 14.3% to $156.1 million and liquidity at $109.5 million despite higher debt and interest expense. The company reiterated FY2026 outlook for 4-6% sales decline with Q4 growth, 3-5% adjusted operating margin, and free cash flow breakeven, signaling confidence in strategies for profitable growth amid restructuring progress.